El Salvador Economic Outlook

February 13, 2018

The economy performed well in the months following the third quarter, in which growth benefitted from a strong agricultural sector and a solid showing in industry. In December, remittance inflows increased 6.3% year-on-year. Moreover, from January to December, exports grew strongly compared to the same period a year earlier, although higher oil prices spurred imports to grow at a faster pace. Meanwhile, on 5 January, the 2018 fiscal budget was approved in the Legislative Assembly. There was an increase in expenditure agreed compared to the 2017 budget; however around one-fifth of total expenditure will be on public debt repayments, limiting the government’s ability to invest in growth-enhancing areas.

El Salvador Economic Growth

This year, the economy should be supported by higher levels of government spending and fixed investment. In the longer term, however, there are concerns about the stability of remittances from the United States. FocusEconomics panelists expect GDP growth of 2.2% in 2018, which is unchanged from last month’s forecast, and 2.2% again in 2019.